Tories can win election in economic downturn, Miliband is warned

TUC economist says victory will be decided in better off marginal seats as poll shows Labour has worse trust ratings on economy

Ed Miliband launches Labour's local election campaign in Birmingham, pledging to govern for the whole country, 'not just for the wealthy few'. He has been warned the strategy holds dangers. Photograph: David Jones/PA

Labour needs to avoid falling into a trap of assuming that "channelling popular anger" about Britain's poor economic performance will lead to victory at the next general election, which will be decided in relatively prosperous parts of Britain, a TUC economist has warned.

As Labour intensifies its attacks on the coalition for cutting the tax credits of low income workers, Duncan Weldon warns that the next election could see a repeat of the 1930s and 1980s, when the Tories won despite a bleak economic outlook.

The intervention by Weldon, in an article for the spring edition of the Fabian Review, comes amid signs of a growing loss of confidence in the management of the economy by David Cameron and George Osborne.

A ComRes/ITV News poll, published on Friday night, shows that the prime minister has a net trust rating on the economy of minus 22%, compared with minus 12% last October.

The chancellor has a net trust rating on the economy of minus 39% compared with minus 22% in October.

But the figures for Ed Miliband and Ed Balls are even worse. The Labour leader has a net trust rating on the economy of minus 43% against minus 46% last October. Balls is on minus 47% against minus 49% last October.

The poor poll findings for Miliband and Balls will fuel concerns among some on the centre-left, highlighted in the Fabian Review, about the thrust of Labour's economic policy.

In his Fabian article, Weldon warns that Labour should be careful because the next election could see a repeat of the 1930s and 1980s, when the Tories won because many parts of Britain still managed to prosper. His research shows that in the constituencies Labour needs to win back to form a government, the recession is having a less severe impact than in seats the party already holds.

Weldon has found that the claimant count is 3.6% in the 50 most marginal seats. This compares with 5.2% in Labour seats and 4.7% in the 30 most marginal Labour seats. The national average is 5%.

Using a different measure, the overall unemployment rate in traditional Labour areas is also much higher than in Tory areas. It stands at 11.2% in the north-east, and 6.5% in the south-east.

Weldon, who has written for the Fabian Review in a personal capacity, says: "To give some sense of the data, whilst the UK's overall level of unemployment is comparable to that of the struggling USA, the picture in the south is actually far closer to that of booming Germany.

"Meanwhile in the north, the best comparators are crisis-hit Bulgaria or Hungary.

"Broadly stated, areas that voted Conservative have both lower unemployment and have seen less of a rise in unemployment over 2011.

"Any Labour strategy aimed at channelling popular anger over poor economic performance needs to take this into account."

He also found that the average worker in a Tory seat earns £27,977, 15.6% more than the average worker in a Labour seat on £24,192.

The mean gross annual full time earning average is £26,148.

Weldon says the north-east, Yorkshire and the Humber and the north-west, where Labour is heavily represented, will lose proportionally the most number of jobs as a result of the estimated 710,000 public sector job losses between 2011-17. Public sector jobs form a greater proportion of the workforce in these areas.

Weldon says that 11.4% of all public sector workers are based in the north-west, which means the region is set to lose 81,075 public sector jobs.

He argues that the east of England, the south-east and east Midlands, where the Tories are better represented, will be least affected.

"Labour must not fall into the trap of assuming that the gloomy national economic picture will translate to victory at the ballot box.

"History shows that it is perfectly possible for Conservative governments to oversee sluggish growth, rising unemployment and public spending cuts whilst winning re-election. The crucial factor is that enough people are doing comparatively better to sustain an election winning coalition.

"It's often noted that the next election will be decided by the economy. The crucial question is which economy – the local or the national?"

McClymont, who was an Oxford historian before his election to parliament in 2010, also warned that the 1930s and the 1980s showed that the Tories can prosper even during downturns.

Andrew Harrop, general secretary of the Fabian Society, said: "This analysis from Duncan Weldon starkly illustrates the challenge for Labour. If Ed Miliband and his team are to win, they must win over people in Conservative-held marginal seats, where the economic picture is much better than in the country at large. However, this research also makes grim reading for the Conservatives, who will need to win seats with struggling local economies if they are to achieve an outright majority."

• This article was amended on 10 April 2012. The original said incorrectly that the Labour party had commissioned research from the IFS. The IFS does not accept funding for research from any political party.